New farm report points to ‘low investment’ in sheep sector

The Sheep Welfare Scheme that was introduced in 2016 and due to run to 2020 has improved profitability and increased output in the sector. Meanwhile, the average borrowings per sheep farm in this country is just under €20,000 while investment in the sector is low.

These were just some of the findings that were discussed by the author of IFAC’s Irish Farm Report 2019 – Philip O’Connor – during the publication’s launch in Co. Laois, yesterday, June 20.

The report details the views of over 2,133 Irish farmers and contains a comprehensive analysis of 21,755 sets of farm accounts over a four-year period.

It also points to the fact that based on the farm data “profits remain low”.

“Like their peers in the beef sector sheep farmers are heavily reliant on EU subsidies. The Sheep Welfare Scheme has improved profitability and increased output; nevertheless, profits remain low,” O’Connor added.

Importance of subsidies

The report’s author went on to say that the top 10% are achieving almost double the output of the average farm and with better cost control.

“Output was €642/ha better than the average farm for the top 10% of farms and while total farm income has been steadily increasing over the years this is mainly due to subsidies,” continued O’Connor.

“In 2018, average income was €34,028, and when we look at income excluding subsidies the increase is more modest – just 5% for the top 10% of farms.”

Meanwhile, those gathered at the launch this week heard that it was clear that any cut to subsidies in the sector will hit profitability directly.

“The continuation of the Sheep Welfare Scheme is of vital importance,” O’Connor said.

‘Investment and demand’

The launch of the latest farming publication also heard that investment in the sheep sector remains low.

Those gathered heard that just €7,355 – on average – was invested per farm throughout 2018; over the last four years the figure averages out at €7,493 while 30% of farms had no “business-related debt” in 2018.

Demand for lamb is seasonal and this is partly driven by religious holidays including Easter and Eid al-Fitr.

O’Connor continued: “Interestingly, over the next six years the gap between Easter and Eid will shorten to two weeks and this may see lamb prices spike ahead of the two holidays.”